Essay on Economics and Growth

Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left.

55). Products priced below equilibrium price cause a shortage of supply because of an increase in demand for lower priced assets (McConnell, Brue, & Flynn, 2009, p. 55).

Apple juice and orange juice are substitutes for consumers, so the fall in the price of apple juice decreases the demand for orange juice. The demand curve for orange juice shifts leftward. The increase in the wage rate paid to orange grove workers raises the cost of producing orange juice. The supply of orange juice decreases and the supply curve of orange juice shifts leftward. The net effect of these events decreases the equilibrium quantity but has an undetermined effect on equilibrium price. If supply decreases by more than the demand, the shift in the

What happens to the equilibrium price and quantity after these changes are put into effect? Do they go up, down or stay the same?P:_____down_____________Q:_____down__________________

Supply is the total amount of a specific good that is available to the consumers. The supply of lobsters depends on the ocean temperature and since the ocean temperature is increasing, lobsters may once again come in a couple more weeks earlier than usual. In 2012, this caused the quantity of lobster to increase significantly, thus the supply curve shifted to the right. The shift caused the equilibrium price to decrease and the quantity to increase. On the other hand, if the ocean temperature is too low, then the lobster production rate is lowered. The supply curve will then shift to the left and cause the equilibrium price to increase and the quantity to decrease. The lobsterman cannot control the supply of lobsters since the production depends on the temperature. Another economic topic that came to my mind is the demand of a product. Demand is a consumer’s willingness to pay a price for a specific good. The demand curve would shift to the right if the price of the lobsters decreases due to mass production and vice

Red line goes up. Not enough supply. New equilibrium point (higher on the price axis) *shift to the right. * price increase and quantity increase.

Identify at least one shift of the supply curve and one shift of the demand curve in the simulation. What causes the shifts?

This causes the price and the quantity move in opposite directions in a supply curve shift. Also, if the quantity supplied decreases at any given price the opposite will happen.

When there is a change of one of the factors of supply- like changes in the prices of production inputs like labour or capital; a change in production technology and its associated productivity change; or the amount of competition in a specific product market- there is a corresponding change in the supply curve. For example, if worker productivity improves due to some human capital or technology investment, then the costs of production decrease. This exerts a positive effect on the supply curve shifting it right, where the new market equilibrium is at a higher quantity and a lower price, holding everything else constant. There can also be a negative shift that moves the supply curve to the left, with the resulting market clearing price being higher and quantity lower, ceteris

When quantity supplied do not equal quantity demanded the outcome is either excess supply or excess demand, and a tendency for price to change. As this happen the consumers will increase their quantity demanded, and the movement toward equilibrium caused by excess supply is both the supply and demand sides. When the excess supply occur quantity supplied is greater than quantity demanded. While the reverse of excess demand quantity demanded is greater than quantity supplied. The excess demand pushes prices upwards in decreasing the quantity demanded and increasing the quantity supplied. This movement takes place along both the supply curve and the demand curve.

Increased supply without changes to the demand creates a surplus leading to a lower equilibrium price and decreased supply. Without changes to the demand, our cost structure would lead to a higher equilibrium price due to shortage.

Changes in the equilibrium price and quantity depend on exactly how the curves shift (Berkeley University, n.d.).

An increase in aggregate demand will shift the aggregate demand curve to the right. This will cause the aggregate demand curve to intersect the short-run aggregate supply curve at a point above and to the right of the previous equilibrium point. This means that total output and price levels will rise. In the graph below, the shift in the aggregate demand curve to the right was caused by an increase in government purchases, this led to a new intersection or equilibrium point from P1 to P2. The new intersecting point is at a higher price level and higher output level.

The equilibrium price increases from P0 to P1 under a cartel. A higher diamond price was what the diamond suppliers were aiming for though the use of a cartel. The quantity demanded also decreased from Q0 to Q1 because some consumers could no longer afford the diamonds at the higher price. This indicates that the price of diamonds is set too high than where it should be.

If the demand for companies output is inelastic then the change in price will have a smaller effect on change of quantity. Let’s say company will cut the price for 10 percent. This will cause the increase in demands for 5